Tuesday, 4 August 2009

Local Political strategist, John Robinson writes about the current serious financial woes facing the Queensland economy, after a decade of Labor rule.

I don't pretend to be an expert; just a layman with a healthy dose of concern.

Recently we saw revealed the payment of $1 million in commission over the placement of $100 million of Queenslander superannuation. Mr. Ross Daley, a former Labor staffer, accepted a secret $1 million success fee for shifting $100 million worth of superannuation funds from Sunsuper to the Trinity funds management group. Which beggars one obvious question. What other success fees / secret commissions have been paid in the past that Queenslanders know nothing about?

Labor in Queensland will have incurred an $85 billion debt by 2012. It’s in the budget papers. The question I think we also need to ask is whether anyone has benefited materially from the financial deals made. Based on a 1% success fee, it is possible by extension to suggest that someone, somewhere may have received an $850 million success fee. This will of course have been factored into the loan interest charged by the lenders. So again we Queenslanders need to fork out to pay for Labor fiscal management or lack thereof during the halcyon days.

One of Queensland’s major income areas has been from the mining industry. In June 2009 BHP Billiton announced settlements reached for most of its 2009 metallurgical coal contracts are for prices about 58% lower than last year. Blind Freddie would see that even a global turnaround tomorrow would get coal prices up to previous levels in one fell swoop. Those countries that need coal for industry, in particular China, are great negotiators. BHP Billiton will need to claw their way back up, dollar by dollar, year by year. Which is pretty pessimistic for Queensland government income over the next few years.

Has anyone wondered where is all this money coming from? The US has been loaned $trillions, Rudd has borrowed $300 odd billion and Queensland’s Anna and her fiscal wiz kid have placed us in hock for $85 billion. The Bank for International Settlements Working paper 286 released in July 2009 said in its precis:-

“China’s emergence as a major player in world trade is well known, but its rising role in global finance is perhaps under appreciated. China is the second largest creditor in the world today, with a net creditor position of exceeding 30% of GDP in 2007.

In this paper, we test the importance of growth differential, demographics, government debt, financial depth and the exchange rate in shaping China’s net foreign asset position. Our findings highlight the sharp fall in youth dependency as one key driver behind China’s puzzlingly large net lender position and also confirm the neoclassical prediction that faster growth attracts more capital inflows.

Looking ahead, our findings also suggest that China is unlikely to turn into a meaningful net debtor nation over the next two decades. Moreover, we project that, as China engages in increased cross-border asset trade, its gross foreign assets and liabilities could triple in 10 years.

While adjustments in China’s net foreign asset position are expected to be gradual and may thus facilitate its capital account opening, increasing exposure to external shocks and growing interactions with the rest of the world may present challenges both to China and to the global financial system.”

I think we are witnessing a major epoch unfolding; the fall of the United States of America as the world’s superpower. China with its huge population is not just taking its place; China will emerge as a mega-superpower.

Countries such as Australia will become beholden for their economic existence to what is decided in Beijing.

For me the question is also how far our political leaders at a State and Federal level will turn a blind eye to reports of human rights abuses, or the squashing of nationalist aspirations, or the imprisonment of Australian nationals, so as not to upset the ageing Politburo leadership who will in the future appear to have so much sway over our lives.

7 comments:

For me the question is also how far our political leaders at a State and Federal level will turn a blind eye to reports of human rights abuses, or the squashing of nationalist aspirations, or the imprisonment of Australian nationals, so as not to upset the ageing Politburo leadership who will in the future appear to have so much sway over our lives.

One way of answering the question might be to look at how far how far our political leaders at a State and Federal level turn a blind eye at present to reports of human rights abuses in the USA (Answer: just about all the way with LBJ, Dubya, Obama etc).

How far do our State and Federal level turn a blind eye at present to the US squashing of nationalist aspirations? (Answer: when invited, our politicians demand that we join in)

Imprisonment of Australian nationals? That's nothing. Our politicians say nothing when Australian citizens are blown up in US-spook sponsored false-flag operations (but then again, they do the same when people are similarly murdered on Australian soil as well, presumably with the connivance of our own misnamed 'intelligence agencies')

I'm more hopeful of Australian politicians speaking out about China in the future than I am about getting them to criticize our big American Super-Sheriff gone bad.

Anyhow, China has no record of global imperialism. It's essentially a defensive state trying to get on with life and bring a modicum of prosperity to its people, still scarred by widespread poverty.

If we behave with some decency, I'd expect the Chinese Government to reciprocate. The parasitized US Imperium is a different matter entirely.

Well said John Robinson. Yes, America is in decline. Let's not overlook the fact that China's spectacular growth was fuelled by the "free market" advocates who ruthlessly outsourced American industry from the Raegan era onwards. Let's not forget that China, too, played a hand in attracting those industries with not only cheap labour (which is the single, solitary reason the dull and uninformed like to harp on with), but often free land, low interest capital and of course, no environmental regulations AND worrying for us consumers, little Quality Assurance controls. (Q.A. costs!) Let's not forget that Western consumers, too, played a role in forging China's growth with an orgy of spending. The future for the West is, I believe, to urgently develop and market entirely new industries, and no, I don't mean "service" industries. Now, more than ever, we need our innovators, inventors and scientists. In the meantime, we should all be learning Cantonese or Mandarin.....

If you want a projection of how China might grow into the future, you could do no better than to look at the recent history of a micro-China: Singapore. In the mid 1960's, at the time of independence from Britain, Singapore was a steamy dirty slum-ridden third-world city. Through sheer hard work, clever strategies, and the suspension of anything resembling “democracy”, Singapore's benevolent dictator (and now his successor son) have created a city state which is a creditor nation, where almost everyone owns their own home, and with one of the highest standards of living in SE Asia. And combined with this; they have also created an inevitable complacency. Today, Singapore has a generation of young people who have never known anything other than affluence, and who will all inherit from parental estates. In the hierachy of needs, material wealth has been satisfied and is no longer a driving force. It is infinitely harder to motivate today's generation than their parents with growth already slowed, and cheap imported labour (mainly from Indonesia) required to complete anything involving menial work.Like China, Singapore has also ruthlessly controlled its population by imposing strict birth control limits upon its citizens – and like China, it has created the biggest growth problem of all; the demographic timebomb. An aging population will slow its growth to a standstill. All this in a generation.

Well, we can probably save a few dollars by dismantling the Australian defence force, after all if China eventually own all the country and companies, they can just walk in rather than invade. Welcome to the United States of China anyone?

Going back to the Queensland part of the issue - yes, John, it is a hideous amount of debt, & more than that, the amount of Government wastage that occurs with the ongoing bureaucratic nightmare at all tiers of government astounds me - State, Federal & Council level. It's got to the point in our society where it is abusive, in the truest sense.

However, re Qld Govt - going back even 18 months (well before the technical GFC), I went to local Member Steve Wettenoballs on behalf of our local Residents Association here at Yorkeys, to ask him if the State Govt. could buy an old & abandoned beachfront property (with AMAZING old trees etc.) to turn it in to a park for the community. It was then priced at about $18 million (which sounds a lot, but in a State budget is miniscule).

The answer was an immediate "No", and the reason, campers? Wettenoballs said: "We're [Queensland] are broke, sorry".

And this was BEFORE the GFC.

[Wettenoballs of course did not suggest any other funding options, did he?]

And then we had the forced demolition of the Cairns Yacht Club, obviously because Queensland needed the money. [It would indeed be interesting to look at the legal status of that land, at present. You busy at the moment, Wendy R?]

Then we had the sale of the Airport - & if anyone has tried to use our formerly tropical & user-friendly airport lately, it's a complete & utter joke. The refurbed building looks like it could be in Milan; there's miles to walk if you land with Qantas, the walkways are apparently infested with AFP officers - or they were, on a recent friends' departure; all the parking space outside the Arrivals side of the terminal parking area is now given over to rental cars, & the Parking Nazis are just as nasty & unhelpful as ever. Even getting in to drop off a disabled traveller (which I have done several times over the past year) has been hideous. All the trees have been ripped out of the parking lot, & the whole area turned in to a barren tarred wasteland. And just to finish off, one would think, given our hot & rainy climate, & given all the bloody money they {whoever the new owners are] have spent on the project - & considering parking fees etc - they (or their idiot designers, no doubt from Melbourne or Alaska or Helsinki) would have given us an Undercover Car Park? No.

Venting again - well, the airport IS a mess.

Actually, I think Andrew Fraser, our esteemed State Treasurer, should be tethered to the tarmac in the Airport car park on perhaps a warm December day, & coated with honey, then pelted with live green ant nests. Or, perhaps I'm just being nasty.

So, ostensibly Queensland had had a number of bumper years at that time (2008), with the mining industry & so on, so why did we already 'need the money' 18 months ago.

And you can only wonder - well, Ms. Bligh was of course the Treasurer in the Beattie Govt.

A lot of this of course has to do with the fact that Queensland has no Upper House, which is totally another topic, and I'm off to feed the green ants.

Always a pleasure to listen to you wax lyrical on the strengths of Labors finest loacl member the ballless one. Harking back to those brown paper bag Joe days an old adhered to mantra was "no nett debt". This state as recently as 2006 was the only state that could actually "in cash" pay out all of its employees entitlements and had the best balance sheet by far. What a complete spiralling disaster this latest pack of morons have created. The last post regarding 10% hospital cuts is just another indication of how bad things have got - it really beggars belief that we are in our current situation. I feel there needs to be a drastic change in the actual process of governance in this country as the current formulas are just bankrupting us - your thoughts all?

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